'Betting On Zero' Herbalife Film: Why Wasn't A 30 Year Relationship Between The Film's Producer And Bill Ackman Disclosed?

| About: Herbalife Ltd. (HLF)

Summary

- Betting on Zero debuted last night at the Tribeca Film Festival.

- Press reports indicate the film paints HLF's business model in a negative light.

- Bill Ackman has a 30 year relationship with the co-producer that has not been disclosed.

I am a Herbalife bull. I've published and highlighted that point before. I respect intelligent and educated views on both sides of the debate. The Herbalife situation is a legal grey area and, while I think the company will come out fine, I recognize there are other possible outcomes.

"Betting on Zero" debuted at the Tribeca Film Festival last night. The film is a documentary intended to be an unbiased look at the multi-year battle between HLF and Pershing Square. The film's Director, Ted Braun, had the following comments in a Bloomberg article published on April 14, 2016: "I don't have an agenda for the film as far as the outcome," Braun said in an interview. "I hope it will stimulate a conversation about multilevel-marketing companies, about short selling and government regulation". I have not seen the film yet (all five showings at the TFF were sold out) so I cannot share my personal take on it yet, however, an article published on theStreet.com following the premier last night shows that the tone of Braun's film mirrors that of Ackman's Herbalife bashing video entitled "American Dream Denied."

"Braun appears to share many of Ackman's concerns about Herbalife, with the film's tone very similar to a video Pershing Square recently released on its own website, "American Dream Denied," which shows former Herbalife distributors against ominous black backdrops and a dark music track." (link)

Ackman was an active participant in the film and walked the red carpet last night for the debut. HLF generally declined to participate. In the Bloomberg article, Ted Braun explicitly stated that Pershing Square had nothing to do with funding the film, but so far has declined to provide details of the funding - hiding behind a non-disclosure agreement. The rumor mill is the film's funding came from Pershing or Bill, and, while I have no factual evidence to directly link PS or Bill to the film's funding, I've heard this from enough sources that I personally believe it. Much of the focus of these rumors was on the inability for the production company to financially foot a film of this magnitude, but that's not what I found most interesting...

If you click the link to the Tribeca Film Festival, above, you'll find a co-producer named Devin Adair. Devin Adair's IMDb account doesn't reveal much, but it does show that that up until Betting on Zero, her production credits were under Devin Zimmerman. A search under Devin Zimmerman revealed a 2011 Bloomberg article about a Harvard Crew alumni event celebrating their long-time esteemed crew coach, Harry Parker. The article quotes both Ackman and Zimmerman, who were in attendance. However, the connection goes beyond just an alumni event at the Harvard Club in 2011....

Devin Zimmerman's name in college was Devin Mahony. Devin Mahony was the first female coxswain on the men's heavyweight crew team at Harvard. She was at Harvard from 1982-1986 and was inducted into the Harvard Varsity Club Hall of Fame alongside the rest of the NCAA champion crew team of 1985. She wrote a book about the experience.

Interestingly, the LinkedIn profile for Devin Adair does not list Harvard in her education, just her MFA in Film from Columbia University. Expanding the Summary section of her account does give mention of Harvard and her role on the crew team. Personally, I've never met anyone else that went to Harvard that didn't want me to know that and didn't make it clear in the Education section of their resume...

Bill Ackman was at Harvard from 1984-1988, a member of the Harvard crew team and would have overlapped with Mrs. Adair/Zimmerman/Mahony for two years. I played a similar sport at a similar school and can tell you that the bonding and camaraderie with teammates has lasted my life time (I'm roughly the same age as Bill). As the Bloomberg article above shows, both Devin and Bill have remained active in the Harvard crew alumni network; we have found multiple other dinners/events where they were both attendees.

Does this have anything to do with the technical merits of HLF's business model? Absolutely not. What it shows is an undisclosed, intriguing connection between a widely discussed, supposedly unbiased documentary and the "star" of the film - a stock trader with a massive short position on a multi-year, multi-million dollar scorch-the-earth campaign who is currently very underwater on his Herbalife bet. I'd like to see an explanation of why the 30-year relationship between Bill and a producer wasn't disclosed and complete transparency into the funding of the film.

Disclosure: I am/we are long HLF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.